“[The launch of DIGA] t means investors do not have to directly hold cryptocurrencies and, importantly, provides Australians with the ability to access the potential upside of the next wave of financial market innovation.”Cosmos is itself owned by Mawson Infrastructure Group, an Australian-born, Nasdaq-listed bitcoin miner, although the parent company of the fund’s issuer will not be included in its holdings because it lacks the requisite daily trading volume.The fund’s largest holdings include Riot Blockchain, Marathon Digital Holdings and Hut 8 Mining Corporation.Its launch comes amid a flurry of fund launches aiming to give investors exposure to crypto assets via global sharemarkets. ETF Securities listed a “fintech and blockchain” ETF on Chi-X earlier this month, investing in a broader universe of 75 tech companies.BetaShares, where Mr Annan was previously a director for three years until May, has announced it will list a fund tracking the Bitwise Crypto Industry Innovators Index on the ASX. But a notice on the BetaShares website says the CRYP ETF is still “coming soon”.Meanwhile, an ETF investing in bitcoin futures, managed by US firm ProShares broke an 18-year record when it amassed $US1 billion in assets within two days of listing on the New York Stock Exchange earlier this month.But Mr Annan said the DIGA fund would be the “purest” of the equities ETFs linked to crypto markets, given its concentration of companies with major balance sheet exposure to digital assets, especially bitcoin. It does not include impartial trading platforms or crypto wallets, for example, or other intermediaries.The underlying index boasts past returns exceeding even that of bitcoin itself, returning 1257 per cent to investors over the two years since it was established, compared with bitcoin’s 645 per cent over the same period. The ASX 200 returned 21.3 per cent and S&P 500 (tracking the largest US listed companies) returned 42.9 per cent.The goal, Mr Annan said, was to get “as close as possible to the physical asset” of digital currencies while in a structure that stockbrokers and financial advisers can work into their existing workflows and regulatory compliance obligation. “DIGA does that,” he said.‘Waiting for clarity’But he admitted that the launch of the niche equities ETF was a plan B strategy and said Cosmos still harboured hopes of creating a listed fund investing in bitcoin itself, akin to the longstanding commodity-backed funds such as ETF Securities’ GOLD ETF.“There has been pent-up demand for a bitcoin ETF for some time,” Mr Annan said. “That is still in the works with the regulator and exchanges but we began looking at ‘what is the alternative?’”The design and structure for a bitcoin ETF has already been developed by Cosmos, including the thorny issue of custody of assets, but the start-up was waiting for such a product to be “allowed”, he said.BetaShares and rival ETF manager VanEck have both applied to the ASX to list cryptocurrency-backed funds on the exchange.Chi-X chief executive Vic Jokovic said Australia was taking a “very, very cautious” approach to bitcoin ETFs and missing out on innovation occurring in other markets.“There are fund managers that are ready,” Mr Jokovic said. “The hold-up is that it’s just not clear in whose wheelhouse regulation sits. There are a lot of people waiting for clarity from the government or regulator.”While the recent Senate report on crypto regulation was “positive” in that it supported innovation in digital assets, it did not give much certainty to ETF manufacturers or exchange providers, he said.The Australian Securities and Investments Commission in June threw cold water over the race to list a bitcoin ETF after saying such a product could be a “real risk of harm to consumers and markets” and must be operated and regulated carefully.More broadly, the former Deutsche banker said Chi-X had been “encouraged” by its new owner, Cboe Global Markets, to be unafraid to venture into cryptocurrency markets.Cboe, the third-largest sharemarket exchange in the US, last week acquired ErisX, a digital asset derivatives and clearing platform.